Furse to meet Nasdaq chief after share swoop

London Stock Exchange chief executive Clara Furse is preparing to meet her opposite number at Nasdaq, Robert Greifeld, after the Easter break.

Having rebuffed the American exchange's £2.4bn bid approach a fortnight ago, she has been effectively forced into the meeting, which is likely to take place early next week, by its surprise £448m swoop on LSE shares on Tuesday.

Nasdaq snapped up a 14.99% stake, paying £11.75 a share, and is now the London exchange's largest single shareholder.

The LSE said yesterday it noted Nasdaq's recent investment but reiterated that it had "extremely strong growth prospects as a standalone business" with trading on SETS, its electronic order book, continuing at record levels.

It added: "Furthermore, the board is exploring the options available to it to create additional value for shareholders and customers, including discussions with other major exchanges.

"The board believes that the current share price does not fully reflect the shift in its growth prospects, its unique franchise or the strategic options available."

The LSE also made clear it would press ahead with the planned return of £510m to shareholders.

Its shares surged yesterday as the Nasdaq move rekindled bid hopes, briefly breaking through the £12 level, against the 950p a share terms proposed by Nasdaq just a fortnight ago. They closed last night 15% ahead at £11.98½, a gain of 160p. At that level, the group is valued at almost £3bn.

Nasdaq bought the bulk of its stake from Threadneedle Asset Management and, it emerged yesterday, also bought almost 2.7m shares from Scottish Widows Investment Partnership, one of the LSE's biggest institutional shareholders.

Scottish Widows, which retains a 4.3% stake, made a healthy profit on the sale of the shares, which it bought at prices ranging from 350p to 600p.

Under Takeover Panel rules, Nasdaq is prohibited from putting in another bid for the LSE for six months, unless it can tie up an agreed deal, or a rival bidder makes a move. But it will be free to buy another 10% stake in a week's time and a further 5% the following week, taking its stake up to the maximum 29.9% allowed before it would be obliged to make a full bid.

There is no shortage of rival bidders. Euronext, which runs the Paris and Amsterdam stock exchanges, has long been keen to merge with the LSE but is in talks with the Deutsche Börse.

Euronext said this month that, with consolidation among international exchanges now actively under way, it believed it was "the preferred partner for a number of interested parties." It declined to comment yesterday on the LSE developments.

And there was no comment from the New York Stock Exchange, which is also keen to tie up a deal.

Nasdaq has described its stake as "a strategic purchase" and its new status as the LSE's largest single shareholder certainly makes it more difficult for other suitors to make a move. Nasdaq has ensured that rivals would have to get it on board before making any move on the London market.